San Rafael school district adopts budgets amid warning signs

Trustees at San Rafael City Schools have adopted the 2025-26 budgets with an ominous fiscal outlook ahead.

On Monday , the board approved a $91.4 million budget for the elementary district and a $53 million budget for the high school district.

Although the budgets do not signal an immediate crisis, the elementary budget expenses exceed revenues by $6.8 million, while the high school budget expenses exceed revenues by $1.8 million. That means the district is deficit-spending in both budgets, a practice that would eventually deplete the reserves over time.

“This is going to be hard,” Bob Marcucci, deputy superintendent of business services, said in a recent budget presentation to the board. “We’ve been saying this since 2020, and it’s not going to get any easier.”

Marcucci said both the elementary and high school budgets are under pressure from deficit spending, declining enrollment, student absences, expired pandemic grants, canceled federal funding and lower state contributions. He said layoff warnings are likely to be issued next March.

“It’s going to have impact,” Marcucci said. “Eighty percent of our budgets is staff.”

He expects a concerted effort to address funding solutions with staff and the community starting in the fall.

“We have a cautious ‘positive’ certification,” Marcucci said, referring to the three-year reporting cycle mandated by the county and state.

School districts with at least 3% in budget reserves for three years may self-certify as having a “positive” budget, meaning they can pay their bills and have some ability to react to emergencies. If a district dips below 3% in any one of the three years, the budget could be designated as “qualified” by the Marin County Office of Education, meaning the district would need to take immediate steps to cut spending.

If that doesn’t turn things around, a budget could fall to a “negative” status and be taken over by the state.

The San Rafael high school budget is right at the 3% level for 2025-26. For the following two years, the forecast is 3.6%.

The elementary district’s reserves are higher but still on the decline. They are 11.9% for 2025-26, 10.4% for 2026-27 and 9.5% for 2027-28.

“In the fall we will need to dig in as a community to do some corrections and rightsizing,” Marcucci said. “We have some hard work ahead of us, but we’ll be able to get through it.”

Marcucci said the last of the district’s pandemic relief grants are expiring this year and next.

Carolina Martin, the president of the district board, said she wants “a conversation involving re-funding of our COVID funds.”

“We will have to reimagine those,” she said.

Trustee Jason Lau said he wants to look at how to boost attendance, a huge factor for a district that relies on state per-student subsidies based on average daily attendance.

According to Marcucci, the average daily attendance percentages have been declining, meaning the district is paid less by the state on a per-student basis.

“Every day a student is out costs us $80,” Marcucci said, referring to the elementary schools. “That’s not to mention the learning loss, which is immeasurable.”

The per-student state subsidy for 2025-26 in the elementary grades is $14,326 if a student’s attendance is 100% for all 180 days of school. For the high schools, the cost for a student missing a day is $84, cutting into the subsidy of $15,134.

Marcucci said the district needs to step up communications to students, teachers and families about the importance of being in school every day, not only for the budget reasons, but to maintain consistent learning.

The budget problems are also affecting negotiations with at least one of the district’s labor unions.

For the first time in four years, members of the San Rafael Federation of Teachers, which covers teachers and other certificated positions at the high schools, will not receive a “fair share” portion of new district revenue that they usually get by July 1 under a partnership with the administration, according to Morgan Agnew, the union president.

“It’s disappointing and frustrating that we have not yet settled compensation for the upcoming school year,” Agnew said at the June 9 board meeting. “The district is not meeting its agreement under the fair share process.”

Agnew said the fair share portions are assigned by July 1 across the board to the teachers’ salary schedule first. After that, if there is money left over, it goes to wage increases.

“In the past, it’s gone well,” he said. “We’ve settled on fiscally responsible raises in a timely manner, with little acrimony — even when we had last year’s raise of 1.07%.”

That changed this year when “the district did not present a final offer, citing financial uncertainties and budget deficits,” Agnew said.

“They failed to meet the timeline of the fair share process,” he said.

Marcucci has asked the union to delay talks until September or October, after the district closes the books for the 2024-25 school year and receives what is called “unaudited actuals.” Unaudited actuals should present a more accurate picture of how much money the district has, according to Marcucci.

“All we are asking for is our bargaining unit’s share of new revenue,” Agnew said. “It’s not excessive. We’re at the middle of the pack and all we’re asking is to stay there.”

The union and the district have scheduled their next talks on compensation for 2025-26 for Sept. 22 and Oct. 21.

A 2025-26 contract for the elementary school teachers, the San Rafael Teachers Association, was settled with 2% in salary increases and a 0.43% rise in health benefits.

The classified workers union, the California School Employees Association, will have its next talks on a 2024-25 contract on July 16. The association has not started talks for 2025-26.

San Rafael City Schools serves about 7,200 students at 11 schools in transitional kindergarten through 12th grade.